Surcharge is an additional tax payable in addition to income tax, and is levied as a percentage of tax. As per Income Tax Act 1961, surcharge applies in certain cases where income exceeds certain thresholds. Know more on applicability, rates for various entities.
1. Individual / HUF / AOP / BOI / AJP
The following are the various surcharge rates applicable for different persons upto FY 2022-23.
| S.No | Income Slab | Rate of Surcharge | Applicable Regime | Remarks |
|---|---|---|---|---|
| 1 | Greater than Rs 50 lakhs and less than or equal to Rs 1 crore | 10% | Old and New Regime | - |
| 2 | Greater than Rs 1 crore and less than or equal to Rs 2 crores | 15% | Old and New Regime | - |
| 3 | Greater than Rs 2 crores and less than or equal to Rs 5 crores | 25% | Old and New Regime | Surcharge @ 15% will be levied on income tax on Dividend, STCG u/s 111A and LTCG u/s 112A.Rest will be taxed @ 25% surcharge |
| 4 | Above Rs 5 crores | 37% | Old and New Regime | Surcharge @ 15% will be levied on income tax on Dividend, STCG u/s 111A and LTCG u/s 112A. Rest will be taxed @ 37% surcharge |
Budget 2023 Update:
As per Budget 2023, Surcharge rate of 37% is reduced to 25% under New Regime. This is applicable from 1 st April 2023.
As per Budget 2023, Surcharge rate of 37% is reduced to 25% under New Regime. This is applicable from 1 st April 2023.
Calculate your Income Tax
based on latest rules from Budget 2023
based on latest rules from Budget 2023
1(a). Impact of Budget 2023 decision on surcharge
- Currently India is having highest tax rate among the world. The highest tax rate in our country is 42.74%. This highest tax is paid by the taxpayers having taxable income of more than 5 crores.
- However above provision is applicable only for the taxpayers opting for New Tax Regime. This is not applicable for Old Tax Regime. Due to this decision, the effective tax rate is reduced to 39%.
Example:
Mr Ram is having a total income of 6 crores which consists of salary, interest and rental income. Upto FY 2022-23, he is required to pay a tax of Rs 2,52,72,392 under New Tax Regime.
W.e.f FY 2023-24, Mr Ram is required to pay a tax of Rs Rs 2,30,10,000. There is a tax saving of Rs 22,62,392.
Mr Ram is having a total income of 6 crores which consists of salary, interest and rental income. Upto FY 2022-23, he is required to pay a tax of Rs 2,52,72,392 under New Tax Regime.
W.e.f FY 2023-24, Mr Ram is required to pay a tax of Rs Rs 2,30,10,000. There is a tax saving of Rs 22,62,392.
1(b). Marginal Relief
- As Indian Tax system is progressive in nature, tax increases as the income increases.
- Taxpayers having higher income are required to pay higher taxes in the form of surcharge.
- However, with small increase in income, the taxes might go higher. If the tax is higher than the income exceeding prescribed limit, Income tax provides for marginal relief to mitigate the undue hardship.
- Marginal Relief is applicable for Individual, HUF, AOP, BOI, AJP, Partnership Firms, LLP’s, Local Authorities, certain domestic companies and Foreign companies
2. Firm /LLP/Local Authorities/Co-operative Society
Surcharge is levied @ 12% of income tax if the total income exceeds Rs 1 crore. Marginal Relief is available.
3. Co-operative Society
Surcharge is levied @ 10% of income tax. There is no threshold limit for Co-operative society. Marginal Relief is not available as there is no threshold limit.
4. Domestic Company
- If the company has opted for Section 115BAA or 11BAB, surcharge is levied @ 10% of income tax. There is no threshold limit for surcharge applicability. Marginal Relief is not available as there is no threshold limit.
- For the companies other than above referred in point a
- Total Income is greater than 1 crore and less than or equal to 10 crores: Surcharge is 7% of income tax. Marginal Relief is available.
- Total income is more than 10 crores: Surcharge is 12% of income tax. Marginal Relief is available.
5. Foreign Company
- If the total income is greater than 1 crore and less than or equal to 10 crores: Surcharge is 2% of income tax. Marginal Relief is available.
- If the total income is more than 10 crores: Surcharge is 5% of income tax. Marginal Relief is available.